Thursday, 1 October 2009


News Release


Commenting after Robert Peston’s appearance at the Economy, Energy and Tourism Committee today where he said that the legislative proposals for a new banking regulatory regime are “unclear” about who will now be in charge, SNP committee member Rob Gibson said:

“Mr Peston’s appearance at today’s committee was both welcome an interesting. In particular were his comments about the legislation for a new regulatory regime being ‘unclear’ about who would be in charge of the new regime.

“After all we have learnt about how Gordon Brown’s tripartite regime had failed this is extraordinary. Has Labour learned any lessons from the banking crisis?

“We have a trail of headlines showing Gordon Brown’s culpability and this begs the question of what Labour is now playing at.

“This is also why the committee’s inquiry should have the full co-operation of the UK Government, Financial Services Authority and Bank of England.

“Without a full examination of the banks and the regulatory systems they operated under we cannot get to the bottom of what happened in the industry or focus properly on its future.”



Examples of how Gordon Brown failed to regulate the financial sector properly:

1. A speech Gordon Brown gave to the CBI Conference in 2005 where he called for "limited" regulation and even suggested whether there should be regulation at all.

The better, and in my opinion the correct, modern model of regulation – the risk based approach - is based on trust in the responsible company, the engaged employee and the educated consumer, leading government to focus its attention where it should: no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch.

The new model of regulation can be applied not just to regulation of environment, health and safety and social standards but is being applied to other areas vital to the success of British business: to the regulation of financial services and indeed to the administration of tax. And more than that, we should not only apply the concept of risk to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all. In the new legislation we will publish before Christmas we will make this risk based approach a statutory duty of the regulators."

2. The resignation of Sir James – one of the prime ministers key advisors - followed revelations that when he was chief executive of bank HBOS he sacked a whistleblower who warned that banks were heading for disaster. Sir James was knighted on the recommendation of the UK government, and later appointment as deputy chairman of the FSA.

3. The warnings by the HBOS whistle blower reflect similar warnings given to the FSA and the Prime Minister about Icelandic banks months before the UK Government took any action - and which is now seen as being so heavy handed it precipitated an even more rapid collapse.

Links to news articles showing how the FSA and Gordon Brown were similarly warned about the Icelandic banks months in advance can be read here:

PM knew of problems with Icelandic banks in March

FSA was warned not to allow Kaupthing to take over Singer

4. Details of the House of Lords Economic Affairs Committee report on Banking Supervision and Regulationcan be found here:

5. In March - A National Audit Office inquiry into the handling of Northern Rock, found that the tripartite regulatory structure created by Gordon Brown was seriously flawed, and that Treasury officials decided it was not a priority to fix it.

6. “Brown told us not to question banks on risky practices, says City watchdog”:

Contact: SNP Holyrood Press Office - 0131 348 5761

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